THE AGENCY EXERCISES OPTION TO ACQUIRE TOP LEVEL REAL ESTATE
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ASX MARKET RELEASE
12 February 2018
THE AGENCY EXERCISES OPTION TO ACQUIRE TOP LEVEL REAL ESTATE PTY LTD
Australia’s two leading disruptive, fast growing real estate agencies become one
• The Agency Group Australia Ltd (formerly “Ausnet Financial Services Ltd”) has entered into, and
exercised, an Amended and Restated Option Agreement to acquire all Top Level shares held by the
majority shareholders in Top Level Real Estate Pty Ltd (and offer to acquire all other Top Level shares
from those shareholders other than the majority shareholders) for total consideration of 550 million
shares.
• Majority shareholders of Top Level Pty Ltd have agreed to enter into voluntary escrow of 24 months on
shares to be issued under transaction
• Significant efficiencies to be realised immediately by having two businesses operate under one
ownership structure.
• The Agency Group Australia Ltd to benefit from Top Level Real Estate Pty Ltd’s significant East Coast
growth, with that company achieving the following since launching in March 20171:
o 75 high-quality real estate agents recruited;
o 27 agents confirmed to start;
o 9 office locations with 3 proposed new locations;
o $480 million total sales;
o $7.2 million commissions;
o 267 settlements; and
o 3,375 property managements.
1
As at 31st December 2017 (first 9 months).
• As part of the amended transaction, The Agency Group Australia Ltd to conduct:
o a 1:25 share consolidation; and
o a minimum $10 million capital raising.
• Top Level CEO Matt Lahood to be appointed as an executive director of The Agency Group Australia
Ltd, with a Top Level nominated non-executive director to be appointed to The Agency Group Australia
board.
• Completion of acquisition, and addition of a highly experienced east coast real estate sales and project
marketing team, significant property management portfolio and extensive sales pipeline, will fast-track
The Agency Group strategy of rapidly becoming a highly profitable disruptive high-growth real estate
business.
• All share consideration aligns parties to achieving sustainable shareholder value.
Leading disruptive, high-growth real estate agency The Agency Group Australia Ltd (ASX: AU1) (“The Agency” or
“the Company” or “AU1”), formerly Ausnet Financial Services Ltd, is pleased to confirm its wholly owned
subsidiary Ausnet Real Estate Services Pty Ltd, has entered into, and excised, an Amended and Restated Option
Agreement with Aura Principal Investments Pty Ltd (“Aura”), Daring Investments Pty. Ltd. (“Daring Investments”),
Teldar Real Estate Pty Ltd, MAK Property Group Pty Ltd, SEMC2 Pty Ltd and Ben Collier Investments Pty Ltd
(“Majority Shareholders”) for an exclusive option to acquire all of the Majority Shareholders’ shares in Top Level
Real Estate Pty Ltd (“Top Level”) (“Amended and Restated Option Agreement”) replacing the Option Agreement
previously announced on 30 January 2017.
Under the Amended and Restated Option Agreement, The Agency was granted an exclusive option to acquire all
of the Top Level shares held by the Majority Shareholders on or before 20 February 2018.
It is a condition precedent of settlement of the acquisition that a separate offer be made to all other shareholders
of Top Level and accepted by all of those shareholders and that the Top Level shares that Daring Investments, in
which The Agency Director Mr John Kolenda holds 50% shareholding in (and directorship of), transfer its Top
Level shares to two of the other Majority Shareholders.
Commenting on the acquisition, The Agency Group Australia Ltd Managing Director Mr Paul Niardone said, “This
transaction provides an exciting opportunity for The Agency, its staff and shareholders, and further cements our
position as the fastest growing disruptive real estate group in the country.”
“Top Level, which has been trading as ‘The Agency’ on the east coast of Australia since launching in March this
year, has established, with our support, a significant business in a short period of time, surpassing our
recruitment and sales targets.
Since commencing operations Top Level has achieved the following2:
o 75 high-quality real estate agents recruited;
o A further 27 agents confirmed to start;
o Expanded to 9 office locations, with 3 proposed new locations;
o $480 million total sales;
o $7.2 million commissions;
o 267 settlements; and
o 3,375 property managements.
“Integration of these two businesses makes perfect sense, since both parties will be able to capitalise on the
continuing success of The Agency brand, the rollout of the Sell Lease Property Brand while fully realising the
efficiency benefits of working under the one ownership structure, Mr Niardone added.
Importantly, Mr Niardone also believes the revised acquisition structure which will see the total number of shares
to be issued reduced by 416 million shares, removes a significant 'overhang’ that would have existed under the
original transaction structure.
“The removal of this overhang has been viewed positively in our discussions with corporate advisers and
institutions,” he said.
“This is a good outcome for both existing Agency Group shareholders and Top Level shareholders, and ensures
both groups are aligned to achieving sustainable shareholder value.
“Integration of these two businesses makes perfect sense, since both parties will be able to capitalise on the
continuing success of The Agency brand, the rollout of the Sell Lease Property Brand while fully realising the
efficiency benefits of working under the one ownership structure,” Mr Niardone concluded.
On completion of both the Top Level transaction and the proposed transaction with ServTech Global Holdings Ltd
(ASX: SVT) (refer ASX announcement dated 14 December 2017) There Agency Group will be the only national real
estate company to have two national brands in the Australian market - replicating a strategy that has proven very
effective in both the US and UK real estate markets..
2
As at 31st December 2017 (first 9 months).
Top Level CEO Matt Lahood, who will become an Executive Director of The Agency Group, believes that by
formally joining The Agency Group Australia, the Top Level team can significantly enhance and fast track its
already impressive east coast offering and results to the benefit of the enlarged business.
“We are thrilled to be merging with The Agency Group Australia to become Australia’s leading disruptive, high
growth real estate agency,” he said.
“In only nine short months of launching, the Top Level business has grown to nine offices on the East Coast, 75
high quality agents, $480 million total sales, $7.2 million commissions, 267 settlements and 3,375 property
managements - exceeding our own recruitment and sales targets.
“I am highly confident this agreement will provide us with great scale and will create great leverage with our
clients nationally.”
In January 2017, The Agency announced it had entered into License Agreement and Option to acquire Top Level
at any time on or before 30 January 2018.
Under the License Agreement, Top Level has had the right to use ‘The Agency’ brand and intellectual property on
Australia’s east coast.
Currently, The Agency’s East Coast offices include Melbourne, Gold Coast, Bondi Beach, Bondi Junction, Coogee,
Neutral Bay, Mosman and Annandale, with proposed new locations in Adelaide and Brisbane.
Combined, The Agency’s East Coast and West Coast would consist 131 real estate agents, approximately 114
staff, 4,000 property managements. It has generated $31 million revenue so far in 20172.
Consideration
Consideration for the acquisition of all issued capital in Top Level is 550 million fully paid ordinary shares in The
Agency to be issued amongst all Top Level shareholders.
Consolidation and Capital Raising
As part of the conditions precedent to the acquisition, The Agency will be undertaking the following corporate
activities:
• A consolidation of The Agency’s issued capital on a 1 for 25 basis (i.e. the 639,229,412 shares currently on
issue to be consolidated to 25,569,176 shares on issue – based on the shares on issue as at 30 January
2018).
• The Agency to launch a placement (on a pre-consolidation basis) to raise a minimum of A$10 million in
gross proceeds through the issue of fully paid ordinary shares at an issue price of $0.02 per share to
ensure the acquisition is funded.
Indicative capital structure
An indicative capital structure setting out the effect of the Top Level transaction and consolidation is set out
below. The final number of shares on issue is subject to change, depending on the final amount raised under the
capital raising.
Shares Quoted Unquoted Performance
Options1 Options2 Shares
3
Current issued capital 737,793,034 24,076,072 260,742,739 113,333,3344
Securities to be issued as 550,000,000 Nil Nil Nil
consideration for the
Acquisition
Securities to be issued 500,000,000 Nil Nil Nil
as part of the Capital
Raising
Total on Pre- 1,787,793,034 24,076,072 260,742,739 113,333,334
Consolidation basis
Total on a Post- 71,511,721 963,043 10,429,710 4,533,333
Consolidation basis
(25:1)
Notes:
1. Exercisable at $0.15 per option on or before 30 April 2019.
2. 5,000,000 options exercisable at $0.15 per option on or before 30 April 2019, 51,666,667 options exercisable at $0.04 per
option on or before 19 December 2019, 150,000,000 options exercisable at $0.02 per option on or before 2 years from the
date of issue, 2,000,000 options exercisable at $0.04 per option on or before 3 years from the date of issue, 8,000,000 options
exercisable at $0.025 per option on or before 3 years form the date of issue, and 20,000,000 options exercisable at $0.025 on
or before that date which is three years from the date of issue to be issued to Patersons Securities Limited (or nominees).
3. Assumes the issue of 150,000,000 Shares the subject of the Company’s prospectus dated 14 December 2017.
66,666,667 performance shares issued to vendors of Ausnet Real Estate Services Pty Ltd and 46,666,667 performance shares issued to
current directors as part of the acquisition of Ausnet Real Estate Services Pty Ltd.
Board and Management
Upon completion of the acquisition, Matt Lahood will join the board of The Agency Group Australia Ltd as an
Executive Director. Mr Lahood has more than 30 years in real estate sales and more than 2,000 property sales
worth over $2 billion.
In addition, a Top Level nominated non-executive director will also be appointed to the board of The Agency
Group Australia Ltd upon settlement of the acquisition.
Shareholder Approvals
Various shareholder approvals will be required to approve the matters contemplated by the Amended and
Restated Option Agreement – for example, the issue of the 550,000,000 shares to be issued as consideration to
the Top Level shareholders, the issue of the shares the subject of the capital raising and the proposed
consolidation.
Shareholders will receive a Notice of Meeting setting out the various resolutions relating to the acquisition. A
detailed explanatory statement will accompany the Notice of Meeting and will be distributed to all shareholders
prior to the meeting.
Application of Chapter 11 of the ASX Listing Rules
Based on submissions made to ASX, and advice from the Company that voluntary escrow of 24 months would be
applied to the Company shares to be issued to the Majority Shareholders as consideration for their Top Level
Shares, ASX has confirmed that the Company must comply with Listing Rule 11.1.2 and seek shareholder approval
for the Top Level transaction.
The Company has been advised that it should consult with ASX in the event that the proposed
consideration for the Top Level transaction changes or the Company proposes to enter into any
transactions in the next 12 months or the Company proposes to conduct any further capital raisings
within the next 12 months, so that ASX may consider the application of Listing Rule 11.1, and in
particular Listing Rule 11.1.3. ASX has considered Listing Rules 11.1.2 and 11.1.3 only and makes no
statement as to the Company’s compliance with other Listing Rules.
Conditions Precedent
Following the exercise of the option, settlement of the acquisition of all of the shares in Top Level is conditional
upon, and subject to, a number of conditions as follows:
• Independent Expert’s Report: any independent expert’s report prepared for the purpose of shareholder
approvals concluding that the transactions contemplated by the Amended and Restated Option
Agreement are either fair and reasonable or not fair but reasonable to the non-associated AU1
shareholders;
• Regulatory Approvals: The Agency obtaining all necessary regulatory approvals or waivers pursuant to
the ASX Listing Rules, Corporations Act or any other law to allow The Agency to lawfully complete the
matters set out in the Amended and Restated Option Agreement;
• Minority Shareholder Offer: A separate offer, under a more short form agreement such as a share
transfer form (“Minority Shareholder Offer”) being made and all shareholders in Top Level (other than
the Majority Shareholders) accepting the Minority Shareholder Offer;
• Capital Raising: The Agency completing a capital raising (on a pre-Consolidation basis) of no less than $10
million via the issue of shares at an issue price of $0.02 per share;
• New Board members:
o Matt Lahood entering into an executive services agreement with AU1 and consenting to act as an
executive director of AU1; and
o the appointment by the board of AU1 of an additional, non-executive director nominated by Top
Level prior to Settlement;
• Top Level debt: immediately prior to Settlement, the total debts of Top Level are no more than as agreed
between the parties;
• Convertible loan agreements: execution by each of the Majority Shareholders (other than Aura and
Daring Investments) Top Level and AU1 of a convertible loan agreement in agreed form (the “Convertible
Loan Agreement”) pursuant to which, subject to settlement of the acquisition, those Majority
Shareholders assign the benefit of the debt currently owed by Top Level to AU1 in consideration for the
issue by AU1 of new convertible notes on a dollar-for-dollar basis;
• Transfer of Daring Investments’ Top Level shares: Daring Investments transferring a portion of its Top
Level shares to two of the other Majority Shareholders; and
Top Level loan agreement: execution by Top Level and Daring Investments of a loan agreement in a form agreed
by Top Level, Daring Investments, the Majority Shareholders and AU1 setting out the terms upon which the debt
currently owed by Top Level to Daring Investments will be repaid.
Ends
For further information, please contact:
Investors Media
Paul Niardone David Tasker/ Colin Jacoby
The Agency Group Australia Ltd Chapter One Advisors
E: pauln@theagencygroup.com.au E: dtasker@chapteroneadvisors.com.au
cjacoby@chapteroneadvisors.com.au
T: +61 08 9204 7955 T: +61 433 112 936 / +61 439 980 359
About The Agency Group Australia Ltd
The Agency Group Australia Ltd consists of a group of successful businesses which deliver finance broking, real
estate services, settlement services, property management (2017), project marketing, insurance and financial
planning initially to the Western Australian market with an aim to be rolled out nationally.
This model has been created to build the core asset being a loan book currently at ~$1.1 billion by cross referring
clients between business units. The largest growing referral area
has been built on a highly successful and disruptive real estate agency model named “The
Agency”. The agents have been referring ~60% of all sales for financing broking.
The Agency Group Australia Ltd is aiming to recruit ~100 sales representatives to “The Agency” in Western
Australia that will eventually deliver over 1000 property transactions per year with the aim of converting into
cross sales for mortgages, settlements and insurance. Each sales representative that joins Ausnet not only adds
sales activities but also on average bring in a database of ~2000 clients. Ausnet’s target is to have ~600 sales
representatives nationally.
The Company is also backed by Finsure Group, one of Australia's fastest growing retail finance brokerages writing
over $1 billion in new mortgages every month across 1300 brokers.
Corporate website: www.ausnetrealestateservices.com.au
The Agency website: www.theagency.com.au